ALD cost reduction activities are expected to be
complete by year end 2016 and are in addition to the previously
announced restructuring plans, which targeted $20 million in annualized
savings. In total, these initiatives are expected to generate $30
million in annualized savings.
"While we have
continued to make progress with our ALD technology development for
advanced semiconductor applications, the expected timing for revenue
realization has been delayed," said John R. Peeler, Chairman and Chief
Executive Officer. "Consequently, we have made the difficult decision to
lower investments in our ALD program. We plan to retain the
intellectual property and technology capabilities and continue to assess
future market opportunities."

In the third quarter, the company
expects to record total asset impairment and restructuring charges of
between $56 and $62 million, or $1.44 and $1.59 on a per share basis. Of
these charges, the vast majority are non-cash relating to an intangible
ALD asset impairment, while approximately $2 million are cash
restructuring charges.

Third Quarter 2016 Revenue Update

Overall
LED industry conditions and demand for our products have continued to
improve. As a result, revenues for the third quarter 2016 are expected
to be at the high end of the previously announced guidance range of $70
million to $85 million.

Veeco plans to issue third quarter 2016
financial results and host a conference call to discuss these results in
further detail on November 1, 2016.